FlightAware drops lawsuit against Kalshi as federal courts diverge

A data company walked away from its case against Kalshi this week, and the dismissal landed quietly enough that it might be easy to miss what it signals about where this litigation cycle is heading.

FlightAware had filed suit alleging that Kalshi's flight delay contracts — markets that let traders bet on whether specific flights would arrive late — misused proprietary data. The case ended with a dismissal. No settlement terms have been made public, no judgment on the merits. Just gone.

That matters because flight delay contracts were one of the more exposed product lines Kalshi had been running outside the sports event fight. The argument against them was different from the state gaming argument: this was an intellectual property and data licensing claim, a private party rather than a regulator, and it carried its own distinct legal risk. Its disappearance removes one flank at a moment when every other flank is active.

Joe Webster, a partner with Hobbs Strauss who has tracked this litigation as closely as anyone in the industry, put the broader picture in plain terms during a recent Indian Gaming Association webinar: roughly eighty cases are now filed across state and federal courts, and approximately eighty-five percent of decisions have gone against prediction markets. That number deserves to sit for a moment before anyone draws the obvious conclusion from the Third Circuit's May ruling.

The Third Circuit held two-to-one that sports event contracts are swaps under exclusive CFTC jurisdiction, blocking New Jersey's cease-and-desist. But one appellate court is not a doctrine. Webster expects a circuit split — the Fourth, Sixth, and Ninth Circuits have fully briefed cases and could rule at any point — and a split is exactly the condition that pulls the Supreme Court in. Webster said Wednesday he believes New Jersey will file for certiorari by early September, though whether the Court grants review is not yet known.

Here is where I part from the prevailing read. The dominant market narrative treats the Third Circuit ruling as close to dispositive — a federal preemption argument that wins once and then wins everywhere. I don't think the arithmetic supports that. Eighty-five percent of decisions going the other way is not noise. It reflects a genuine legal ambiguity about whether a contract that resolves on whether a named athlete plays a named game is a financial instrument or a wager. Judge Roth's dissent in the Third Circuit was not a fringe position. It is the position that has prevailed in the overwhelming majority of lower court rulings.

I am aware of my own tendency to weight downside scenarios. I am adjusting for it here, and I still come out skeptical of the bull case on preemption.

The FlightAware dismissal is genuinely good news for Kalshi — one less open legal file, one less discovery obligation, one less thing for a state regulator to point at. But the flight data case was always peripheral. The eighty cases that remain are not peripheral. Webster's framing is right: the only ruling that will actually settle this is one the Supreme Court has not yet agreed to write.